Sher Value: The World Under Debate.

Call me a cynic but in my long career of finance and speaking and attending conventions I learned some pretty easy lessons. The more flamboyant the proceedings the chances are little will be done post conference; the longer the speech the less the action, and the list goes on. The World Economic Forum in Jordan, perhaps faces the challenge of not becoming another Davos summit, long on rhetoric and short on delivery. As someone once said that what people carried back from Davos was always a good story.

However, the challenge for the WEF at Jordan is remarkably different; it happens at time when, as clichéd as this may sound, the Middle East, along with the extension to Afghanistan and Pakistan, are perhaps at their fragile worst. While the Gulf States have a great story to tell, and one they must shout out, the proverbial apple cart of good tidings can be upset in one harsh political (or military) tug. While the view from Washington may well be that the issue is primarily of terrorism and democracy, many insiders realize its all about developing the opportunities for the human capital to improve their lot.

If Davos has failed to move beyond being a debating platform where promises were made, and perhaps broken, the WEF at Jordan is taking on the task of making some bold announcements, especially for the region. The test will be to keep these promises as the undernourished and starving are watching the developments, perhaps clearly aware that time is running out. There has to be a political settlement to all, and I mean all, outstanding political issues in the Middle East to allow for any sensible economic model to be rolled out. One cannot have disjointed solutions which can be derailed by political events and the carnage we have seen for the past few years repeated.

While the summit is known as an economic summit, the reality is that the convergence of the different pressures and trends within society, political or social, cannot be cast aside. If there is a message that needs to be put forward is that leaders of the region have to act, enough of sitting back and seeing the dividends of hard work being shoved into a net of inequalities and indifferences. Its time to overhaul the system and as Sh Mohammed bin Rashid stressed, become competitive to survive and grow. There has to be a comprehensive long term strategy that delivers, and delivers effectively. It cannot be any more that a minority of the people share the dividends of growth, and it seems that there is an emerging leadership that is seeing what strategies have to be adopted not tomorrow but for the next 25 years to employ over 70 million odd people. Its time to get real and that is what the summit must stress, and to do that ACT! The soap opera of human development has to end and the hard truth has to be molded for a better future for humankind, failure to do so will mean a catastrophe that will not be easy to comprehend.

Construction Week Article: Completion Schedules

One of the most frequent questions I am asked is what is happening in Dubai and the UAE in terms of all the construction. Yes indeed, I once described Dubai as Las Vegas on steroids (without the gambling). Walk through a construction site, or a project managers office and you will see the sheer magnitude of what is happening. Indeed it would seem that not only it is like its all on construction steroids but indeed a large dose of it.

Then when will all this construction be finished and is it all happening within the time frame that we anticipated?

Here there are a few issues that need to be clearly understood. If you believe the media hype then good for you, in the real world there is a great deal of engineering needed from planning infrastructure all the way up to the build and completion of these projects. You cannot cut and paste a building from the drawing board on the site, (wish it was that easy). The challenge for these projects is the following:

1. Infrastructure: Indeed there is a lot that has been said about this, but from where I sit there is no doubt that the infrastructure capacity exists for the development underway. The issue is getting that infrastructure out to the different and diverse range of projects that are out there. In one sense a large format framework plan has to be agreed with the utility companies covering the next 10 odd years and then projects should be announced.
2. Phasing: When projects are announced the PR machine makes it sound like everything will be built in two to three years, when in reality the project plan is phased over 10 odd years. The result is a set of expectations in the marketplace which are out of sync from the reality from day one.
3. Capacity: If I was to take all the projects announced as of today and plot them against the resource capacity currently available there is no way these projects can be completed within even 5 years. Only those projects who have contracted the resources and locked in the prices have a decent chance to be completed on time.

What this does imply is that over the next few years a number of projects will have to be realistic about their completion schedules and by the sheer weight of market force adjust to this reality. A prominent contractor told me just last week that with all that is planned and under construction the resources do not exist to put it all together in this time frame. When I asked how many more resources are needed, his crisp response was that it would mean tripling the labor force, doubling the plant and equipment and most important have a robust supply chain for building materials that can sustain the build process for a 4 to 5 years building spree.

This is not an easy process especially considering that planners keep announcing new projects which are adding to the pile of ‘to do’ list. There is a way to do all this faster but it will mean compromising on the quality and the delivered product and perhaps in some cases this might already be happening. What is essential to consider is the construction management and the people putting the whole process together. I have seen people with no experience of construction trying to develop very complex and difficult projects with project management budgets that just do not make sense. The end result will be delays as mistakes will be made during the build process.

Looking ahead I do believe that developers will be more realistic about the completion schedules of their projects. I also suspect that developers will announce a wider phasing plan for the projects and confirm completion dates once the project has gone into post contract phase.

Sher Value: The Challenge for RTA

The Road and Trans[port Authority, or RTA as it is fondly called, has managed to be in the news from the word go; not a surprise in a city where perhaps the challenge to private and public transport will remain the number one issue for the next decade and more. Indeed the forward thinking of Dubai has meant the establishment of a separate authority for handling the critical aspects of transport within the city. At the heart of any strategy has to be the positioning of a comprehensive transport system that can carry the massive growth within the Emirate into the next many decades.

The announcement of the Light Railway project, or Metro as it is now known as, is an important aspect of any strategy into the future. However, the strategy has an essential element missing in the transport conundrum; the link to Sharjah and the Northern Emirates. Any analysis of Dubai peak traffic pattern will show that a major portion of the traffic comes through from Sharjah and Ajman into Dubai and onto Jebel Ali. As plans stand now there is no link towards Sharjah this defeating the purpose of a Metro system where it is needed most.

Some may argue that the strategy is that Sharjah residents will drive to the Rashidyia station and then connect to the Dubai Metro system. Nice idea in theory but try and think of someone living at al Khan area in Sharjah; why should this person drive to Al Mulla Plaza then South to Rashidyia to get on to the system? In country where commuters have become lazy expecting a two stop solution for a single route journey will simply not happen. Test it, ask your neighbor to walk 100 meters at four in the afternoon! I rest my case.

The second important element of the RTA strategy is to impose a toll, SALIK, on Sh Zayed Road with the intention that the more commonly frequented entry points onto Sh Zayed Road would be tolled thus moving traffic on to the secondary and tertiary road network. This is a good idea if the alternate exists, but this does not completely make sense if the alternate system is not up and running. I would imagine that once Dubai Metro was functioning on Sh Zayed road then it makes perfect sense to have a toll to reduce the number of cars on the road, but in the present circumstances its just a license to print money.

There is no denying that the job before the RTA is a gigantic one but it must consider some assistance from the private sector and allow some secondary mass transport solutions to be made from the private sector. This could be in the form of connecting load lines of APM systems and other light mass transport connections that assist the RTA. Once the entire system is in place then by all means we can consider the introduction of a toll on any particular road. Till then, my advice for whatever it is worth, hold back.

Sher View: Killing the Golden Goose

The proverbial golden goose has been killed, stuffed and served on a number of occasions through history. The principal reason the goose gets stuffed each time is that greed is always driving force and this is where someone has to point out what is going wrong. Whether the forces of free economy will be balanced out with prudence is a question that is still open.

Here is where Dubai has to be careful and it might be important for some reflection.

1. A five star hotel on Sh Zayed road has decided that it will charge DH 50 for valet parking (previously was free) and to make matters worse had blocked off all parking places around the hotel in any case. Brilliant! If matters were not bad enough with a bottle of water (Dh 0.50 retail) being sold for Dh 20 (astronomical profit), now if I go to the hotel to meet someone and have a bottle of water the total visit will cost be DH 70 (almost US$20) and then we wonder why is it getting expensive.

2. The Road & Transport Authority (RTA) has also got into the act and now wants to charge for the use of Sh Zayed road through a toll tax. Brilliant idea!! By all means this should be done but ONLY when there is an alternate for the commuters, i.e. enough buses, and ofcourse the Dubai Metro to be operational. How can there be an toll on the road when the alternate is not there for people to use?

3. Hotels have gone insane. A hotel room for US$ 500 is normal and this time around it is just simply crazy. Perhaps the announcement that 40,400 new hotel rooms in three years are coming on will scare hoteliers; NO way... they actually pushed up the rates perhaps feeling lets make more money while the sun shines and the golden goose is cooked to 'well done'.



I do love UAE and indeed Dubai, and these are examples meant to highlight that killing the golden goose doesn't help anyone.

Sher Value: Low Bid Syndrome

Just over a decade ago I was invited to speak at a conference on
Quality and I made a point that upset the organizers and point that
was not received well. The fact it was made in sincerity and earnest
was ignored by critics and perhaps a decade on we can talk about the
subject. We live in what I call a 'low bid syndrome' where in the
search of the lowest, and therefore cheapest, price we ignore quality.
My point has been how can a system espouse quality when the system is
based on the lowest bid getting the contract?


While I do believe where the bidders are on an equal footing then the
lowest bidder getting a contract is all the more reasonable, there is
a propensity for some project owners to take the low bid syndrome to
the extreme. This applies to the area of human resources and
specialist areas where corners are cut and usually the result is that
quality suffers. We need to break away from this mentality and if we
are to create a first class economic and business model then we have
to understand the quality comes with a price. So often the right
person is not hired because his price is higher than we think he or
she is worth and we forget that top class people come with top class
pay packets.

UAE is poised at a fundamentally different position to what was the
case over a decade ago. Today they compete as a business location with
the best in the world and are executing projects that are landmarks in
their own right. You cannot make these iconic projects with the low
bid syndrome in our mind. In our quest for the best we have let the
media agencies decide on the clichés but now it is time for us to
deliver the promise that we make and to do that means that there has
to be a mind shift about this element of the process.


Why is it necessary? It is simply because if we want to foster quality
then that is the only way forward. We must also realize that as the
success of the country has achieved new milestones so too has the
attention of the world media focused more the country and this implies
both good and the not so good things the media will pick up. One
cannot simply say that this is the way we do business as now we
attract a clientele from around the world and with it comes the
attention that is normal. Our quest for quality must continue and
while I can say it doesn't have to be expensive to be quality and
tasteful it doesn't have to also be cheap to the point of ridiculous.

Sher Value: Billionaire List...SO What?

Around this time each year the much celebrated Forbes list comes out
and with it come a huge pile of trivia related to these billionaires
and their lifestyle. Some of it makes for interesting reading and to
be frank some of it ends up being downright disgusting. The top seven
on the list (891 on the list) have a combined net worth more than the
GDP of the GCC countries. The youngest is 23 (ranked 488) and the
oldest is 98, with a vast number of billionaires being those who
inherited their fortunes. What is more interesting is the way they
vary in their lifestyles and the spending habits of these
billionaires.

An Indian billionaire (5th on the list) owns a $128 million home in
London's posh district, while Warren Buffet, (2nd on the list) has
singed off 85% of his $52 billion worth to designated charities and
still lives in the same home he bought 30 years back for $31,500 (now
valued at $700,000). Buffet recently auctioned his Lincoln Town Car
with its distinctive number plate "Thrifty" to raise money for
charity. What stands out is that there are more billionaires in India
(over two dozen) then there are in the entire GCC! Interestingly the
top two on the list, Bill Gates and Warren Buffet have signed off most
of their net worth to charity, and while someone may say its to save
tax I wonder if really tax is a consideration when you have over $50
billion in personal net worth.

Part of the problem with these lists is that while some people are
there for the obvious business worth they created, like the Michael
Dells, Bill Gates, Warren Buffets and Paul Allen's of the world, there
are a number of billionaires who do not disclose enough to make the
list, or keep their worth secret enough that Forbes cannot verify it.
Does this explain the low number of billionaires from the GCC, (only
three from UAE)?

However, what matters is not what you have but how you show it, and
this is where some of the disgust shows up. I have indeed no problem
with wealth and especially if it's hard earned. Yet one can notice the
difference in how this wealth is spent in different billionaire
circles. The Gates foundation (which has joined hands with Buffet to
create financial management to make the foundation assets grow) is
doing an incredible amount of work in area of health, and poverty
alleviation through creating sustainable structure of charity.

I am not sure that billionaires are really ready to pitch into causes
that matter. Of the 891 billionaires only a handful of them are known
for their philanthropy and yet would go to great pains to show of
their wealth. Want me to prove it? In UAE there are 59,000
millionaires in dollar terms, lets create body similar to the Gates
Foundation in Dubai, and each of these 59,000 millionaires donate
$100,000 to this cause, (the three billionaires from the country would
have to be ten times higher) and lets make a change. I would like to
see how many emails do I get for this? I promise in return that I will
put my time and my banking expertise to create and endowment out of
this which will benefit society and select a board of trustees to
manage it. So lets see how many respond, if even 20% respond, I will
eat humble pie and apologize for thinking that wealth and charitable
endowments don't go together.

Sher Value: Texas to Dubai

Halliburton, arguably the worlds largest energy services company has
caused a storm in a teacup in the US by announcing that its Chairman
and CEO, David Laser, is moving to Dubai, where part of the corporate
head office is also shifting. While the legal and corporate head
office will remain in Houston the 'close to business' reasoning has
been argument for the move, prompting a whole host of criticism from
US political circles, many of whom interestingly espouse long speeches
on open world trade. The political heat did seem to lose some of its
teeth through the weekend when Halliburton announced it would actually
be hiring more people in the US as well as indeed in Dubai.

Halliburton, a company that started out in 1919 as the New Method Oil
Well Cementing Company by a certain Mr. and Mrs. Erle P Halliburton,
has not been free from controversy and media attention. Apart from the
political figures who have graced its corporate offices, including
presidents and vice presidents, the company has never been far from
controversy, whether it be selling oil technology to both Iraq and
Libya during the 1990's (when it was banned to do so) or the highly
controversial 'Tehran' office of a company called HPS (with a similar
logo to Halliburton) and offering Halliburton services to the oil
sector, Halliburton catches the limelight, either way, time and again.

But relocating offices and being close to the business is an argument
commonly used by many companies and it would seem that Nokia's
announcement to open a corporate office in the United States and it
would seem a major uproar has been caused in the States by political
circles for mileage. Indeed, what American circles are learning is
that Dubai has been more forthcoming in welcoming the move and the
ease of entry into the Dubai business scene is a huge plus for the
Dubai government. After all it was only a year back when the Dubai
Ports deal in the US caused unnecessary controversy and comment on
what was effectively a business deal.


While the critics will point to Halliburton's controversial recent
history and argue that in the face of investigations and fines perhaps
Halliburton will find being in Dubai away from the media attention may
be conducive to business. Either way the beneficiary of the move will
be Dubai with an estimated 13,000 employees, most of whom will be
relocated here or new hires from other regions brought in, the move
will boost not only the image of Dubai but also the economics of the
market place. In the wake of the move there is a likelihood that other
smaller companies who do regular business with Halliburton and its
subsidiary KBR, will also consider beefing up a presence in Dubai, not
forgetting that KBR is the largest single contractor working in Iraq.
Guess it will all be good for business.

Sher Value: Has Dubai's PR Budget Paid off

Traveling around the United States is an experience, especially for those who will engage and listen; a vast country of diversity in every aspect. Living in Dubai means that in most conversations with the educated elite in the US one gets an interesting perspective of how the average well educated US citizen sees Dubai. My discussions have been with a diverse people from a PhD in Physics to eminent doctors and leading business and even Public Relations gurus. Here is the bottom line of how I see Dubai's PR exercise in the US has panned out.

In terms of the Brand Dubai is concerned there is instant recognition through an number of interesting channels of instant correlation; the Burj al Arab, Emirates Airlines, the horse racing especially the Dubai World Cup. The much publicized DP World episode while in the minds of people does not really provide clarity to audience and more often I was asked by people 'explain Dubai to us' almost in the same breath in which they talked of DP World and the ports deal.

Yes Dubai's spend in Branding has begun to pay off, but in terms of 'explain Dubai' or the real substance of the public relations side of things is concerned it would seem there is much more to be achieved. I have engaged in discussions with some of the best PR minds in the business and it is obvious that for Dubai they must consider a US perspective on getting their PR message into the general public and not only concentrate on select groups. This boils down to strategy, and it would seem here in lies the need for some strategic thinking. Someone has to address the issues not from what Dubai needs, but more importantly what PR strategy is best for Dubai and brings about an acceptance in the minds of the people about the positives of Dubai.

I am of the firm belief that the general public would be in awe and acceptance of the strategy that Dubai is following in its business and social agenda, but that message is not getting into the realm of the general public in the States and perhaps also in Europe. There is that mysterious void in the minds of these well traveled and very smart people here when it comes to Dubai; they know a good about its brands and the general hype and then nothing more. Sure National Geographic writes an article and here and there something crops up but then what happens? There has to be a consistent policy of educating the US about what Dubai is about, bringing out the stories that matter, bringing out the human interest angle and engage in a dialogue with the people.

In a sense the first part of brand Dubai being recognized is well underway, its time some depth was brought into the process. This is where a deeper and well thought out strategy is needed. This is and must be an integral part of the strategy ahead.

Sher Value: Learning from Vegas

One of the big challenges of any leisure and tourism model is to create the pull that not only brings in tourists but also keeps them entertained. UAE in general and Dubai in particular have taken a solid positioning into the arena of leisure and tourism and the mushrooming of hotels and theme parks are slowly taking their tentative steps from the drawing board to the building sites. However, we ought to look around and see what is out there, and if someone got it right in terms of pure entertainment value look at Las Vegas.

Indeed the perception in the minds of most is that Vegas would not work without the gambling, but then that is for Vegas. For the UAE the lesson to learn from Vegas is really about the entertainment value, which quite frankly, is the best in the world here in Vegas. I would agree that for Vegas the pull has been the gambling and perhaps 8 in 10 people go there for that, but this has begun to change as some people will come for the entertainment or the business conventions that are becoming a feature of this place.

Where Dubai would have an edge on Vegas is the quality of the hotels and the service they provide. However a beach and a great hotel is not going to be enough to sustain the business model and this is where it is essential to consider the value of the entertainment content that needs to come to Dubai. To be sustainable and competitive it is vital that the theme parks and entertainment has to be better than what is out there today.

I have seen some of the emerging entertainment and shows that have either been planned or have been shown so far and quite frankly none of them seriously cut the mustard for me. Yes there are some great content offerings under preparation in a handful of projects, but the vast majority of new hotels on the design board are more concerned with the architecture rather than the content within the hotels. This is where developers do not quite see the picture.

However, for superior content to come to Dubai and Abu Dhabi the most important thing to consider is whether this will be fresh content developed for the market or will it be supplanted content like shows and attractions bought and planted here? Development is hard work but indeed the most rewarding in terms of customer appreciation and repeat or recommended visitation. Purchased content has issues of adaptation and in some cases may test the sensitivities of people in the region. Either way we have to get real and understand the challenge ahead is not only about bringing in great architects to built great hotels, but to look inside the envelope and think of some really cool ideas, failing in this simple but crucial aspect would cost millions to developers.